New concerns over shifting costs to patients as private equity firms gobble up health care providers

An ambulance being driven down the street by EMT's.
Photo Credit: Harrison McNeil
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According to a report from Axios, private equity firms like KKR, which recently acquired Envision Healthcare in a $10 billion deal, are experts at monetizing profits from the healthcare system. In order to do this, they have often relied on “surprise medical bills” like ER visits and ambulance rides. Doctor groups, emergency room staffing and air and ground ambulance services are prime sources of money because the price of these services oftentimes isn’t the gravest concern to the patients who use them in emergency situations.

In addition, doctors and ambulance services can opt out of an insurance company’s network without notifying the patient, and then transfer those costs to the patient as well. As Yale health economist Zack Cooper explains, “If you’re willing to engage in some fairly unsavory billing practices, (these services) could be quite lucrative.”

Ambulance groups also argue that they need to charge commercial insurers more in order to offset the budget shortfalls in Medicaid and Medicare. However, as health economist and New York Times contributor Austin Frakt told Axios in an email, “Unless they can point to a credible study of a causal connection between public payer rates and private ones, I would not believe cost shifting exists in this market.” Backing up Frakt’s assertion are studies which indicate that the idea of cost shifting is nothing more than a shell game which ultimately leaves patients and private citizens holding the bag.

KKR was part of a fairly large scale movement into the healthcare system, with acquisitions totaling $8 billion by Blackstone Group and American Securities. Even though Envision has already said that it would move the majority of its out of network contracts to in network status, they are still under investigation spearheaded by Senator Claire McCaskill relating to their tendency to spring surprise bills on patients before KKR purchased them.

As of now, private equity groups don’t need to disclose much information about their finances or strategy, and have no reason to end out of network billing practices. According to Cooper, the existence of such practices simply increases the desire for a move towards a more equitable solution such as a single payer system, which is being touted by several progressive candidates across many state and local races in this election cycle.